Driven by the severe downturn in the global economy and after the firm's CEO Carlos Ghosn reversed his forecast for the 2008 fiscal year that ends on March 31, 2009, from a net profit of $1.76 bn to a loss of $2.89 bn (265 billion yen), Nissan has put on hold its "GT 2012" mid-term business plan and announced a series of emergency measures. For instance, the company plans to reduce its global workforce by 20,000 employees to 215,000 by March 2010 and cut salaries paid to board members and corporate officers by 10% and those paid to managers in NML and affiliate companies in Japan by 5%.
Nissan also said that it will revise its product portfolio canceling 'selected future programmes' without however giving out any specific details. From now until 2012, the automaker will launch an average of 10 all-new vehicles per year, including the company's all-new, A-Platform entry-car lineup and a dedicated all-electric vehicle.
Commenting on the countermeasures, President and CEO Ghosn said: "The additional actions we are announcing today will reinforce our ability to manage through this global crisis, but they also position Nissan for rapid, strong growth when conditions improve. An organisation needs to be flexible enough to meet the changing needs of the business, and I am confident we have the talent, diversity and experience to lead Nissan effectively."
New recovery actions
- In order to focus on recovery actions, our 2008-2012 midterm business plan, Nissan GT 2012, will be suspended, but commitments on quality and zero-emission vehicles will be retained.
- Labour costs will be reduced in line with the decrease in revenues. During FY2009 labour costs in high-cost countries will be reduced by 20%, from 875 billion yen to 700 billion yen.
- Bonus payments to the board of directors will be eliminated for FY2008. Starting in March and until the situation clearly improves, salaries paid to board membersand corporate officers will be reduced by 10% and those paid to managers in NML and affiliate companies in Japan by 5%.
- Nissan will negotiate the implementation of a work sharing scheme for staff workers, to be announced by the end of the fiscal year.
- Global headcount will be reduced by 20,000 through FY2009, reducing Nissan's headcount from 235,000 to 215,000.
- Inventory will be tightly controlled. In March 2008, company and dealer inventory was 630,000 units; that level will be reduced by 20%, to 480,000, by March 2009.
- Production will be right-sized through changes such as shift elimination, non-production days and shorter working hours. These actions will reduce global production by 787,000 units – a 20% decrease compared to planned volume – by the end of this fiscal year.
- Capital expenditure reductions will result in a 21% contribution to saving cash by the end of FY2008 compared to FY2007. An additional reduction of 14% will be made in FY2009, taking overall capital expenditures from 384 billion yen in FY2008 to less than 330 billion yen in FY2009.
- Joint manufacturing projects with Alliance partner Renault in Morocco and India will be revised. In Chennai, India, the joint plant will proceed with a reduced ramp-up speed. In Morocco, Nissan will suspend its participation in the industrial project near Tangiers.
- The product portfolio will be revised, including the cancellation of selected future programmes. Nissan will launch an average of 10 all-new vehicles per year in the 2009-2012 period, including the company's all-new, A-Platform entry-car lineup and a dedicated all-electric vehicle.
- By improving working capital, mainly accounts payable and receivable, Nissan will generate 130 billion yen of cash in FY2009.
- A detailed review is ongoing to identify deeper synergy opportunities within the Renault-Nissan Alliance. The focus is on future investments in products, technology, support functions and purchasing cost reductions. Each company will contribute to free cash flow with a minimum of 90 billion yen (750 million euros) in synergy benefits during FY2009.
